2018 (8) TMI 418 - AT - Service Tax

Manpower recruitment tax appeal partially allowed, penalty deemed unwarranted.

M/s Pritipal Singh Versus Commissioner of Central Excise & Service Tax, Bhubaneswar.

M/s Pritipal Singh Versus Commissioner of Central Excise & Service Tax, Bhubaneswar. - TMI Issues:Calculation of tax liability based on received amount, non-collection of service tax, appropriation of deposited amount, penalty under Section 78 of the Finance Act.Analysis:The case involved a dispute regarding tax liability of an appellant providing Manpower recruitment and supply service to M/s MESCO Steels Ltd. for the period from 2006-07 to 2010-11. The Show Cause Notice alleged non-discharge of tax liability amounting to Rs. 6,83,262. The adjudication order confirmed the demand of tax with interest and imposed penalties under Section 78 and Section 77 of the Finance Act, 1994. The Commissioner (Appeals) upheld the order, leading to the present appeal.The appellant contended that the Adjudicating Authority erred in calculating the tax liability, arguing that tax should only be paid on the amount received, not on the bill raised. It was highlighted that for the years 2006-07 & 2007-08, service tax was not collected due to unawareness of the tax liability. The appellant had already paid Rs. 7,29,700 through various challans and informed the Commissioner (Appeals) of the deposit, which was not considered.Upon hearing both parties, the Tribunal noted the appellant's submission of the letter to the Commissioner (Appeals) regarding the deposited amount and the production of challans. Consequently, the matter was remanded to the Commissioner (Appeals) for verification and appropriation of the deposited amount. Regarding the penalty under Section 78 of the Finance Act, the Tribunal found no evidence of fraud, collusion, willful misstatement, or suppression of facts by the appellant, deeming the penalty unwarranted. Thus, the impugned order was modified, and the appeal was partly allowed.The Tribunal's decision emphasized the importance of calculating tax liability based on the amount received, the non-collection of service tax due to lack of awareness, the need for proper appropriation of deposited amounts, and the criteria for imposing penalties under Section 78 of the Finance Act. The judgment provided clarity on these issues and highlighted the significance of establishing fraudulent intent or willful misconduct for penalty imposition.